Intel plans a $300m (2.14bn yuan) investment to expand its chip packaging and testing operations in Chengdu, China, reported South China Morning Post.
The move aims to enhance server chip capacity and establish a customer solutions centre, despite recent cybersecurity scrutiny from a Beijing-backed group.
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It is expected to bolster the Chengdu plant’s role in Intel’s global supply chain, which packages and tests over half of the company’s laptop processors.
Intel CEO Patrick Gelsinger highlighted Chengdu’s conducive business environment for the company’s stable growth during a visit in 2023.
Chengdu’s Intel Products entity will receive the funds to support the facility’s growth, as revealed by the city’s Reform and Development Commission in a WeChat post.
The plant, operational since 2003, ensures the quality and reliability of semiconductor products as the final manufacturing step.
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By GlobalDataThe funding decision follows a cybersecurity review recommendation by the Cyber Security Association of China (CSAC) for Intel’s products, due to past vulnerabilities in its processors.
CSAC said: “It is recommended that a network security review is initiated on the products Intel sells in China, so as to effectively safeguard China’s national security and the legitimate rights and interests of Chinese consumers.”
CSAC’s recommendations may lead the Cyberspace Administration of China, the top internet regulator, to begin a formal security review.
Intel’s China unit has expressed its dedication to product safety and ongoing dialogue with the relevant authorities.
Despite geopolitical tensions, China remains a crucial market for Intel, accounting for 27% of its total revenue last year.
However, the semiconductor giant reported a $1.6bn loss in the second quarter, contrasting with a $1.5bn profit the previous year, and cited reduced spending in consumer and enterprise markets, particularly in China.
Intel warned of “weaker spending across consumer and enterprise markets, especially in China”.
